Inflation has hit a 40-year high in the U.S., driving up the cost of everything from groceries to housing. As the Fed prepares to raise interest rates, here’s what to watch out for.

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In December, inflation hit a staggering 7 percent. That’s far above the Federal Reserve’s target, and Chair Jerome H. Powell says action is needed to keep the economy from sliding into a recession. Economics reporter Rachel Siegel breaks down the impact of record inflation and what the Fed plans to do about it.

Interest rates have hovered near zero since the start of the pandemic, but now the Fed is looking at a series of raises over the next few months. Personal finance columnist Michelle Singletary explains what that means for borrowers.